Authorities have been working hard to stop counterfeiting and to stop paying ransoms to people who want money.
Nigeria’s central bank has imposed a weekly ban on cash withdrawals to reduce the use of currency in an attempt to curb counterfeiting and ban ransom payments to kidnappers.
Under the new policy announced late on Tuesday, the Central Bank of Nigeria (CBN) said the weekly withdrawal amount has been reduced to 100,000 Nigerian naira ($225) from 2.5 million naira ($5,638).
Most Nigerians do not have bank accounts and use informal markets where cash is preferred. This is intended to bring more people to the bank, and will come into effect on January 9, the CBN said.
“Maximum withdrawal per week using automated teller machines will be 100,000 naira based on a daily rate of 20,000 naira ($45),” it said.
Only denominations of 200 naira and less will be inserted into the ATM, it said.
For businesses, the weekly limit has been cut to 500,000 naira ($1,128) from the daily limit of three million naira ($6,766).
“Departure above this limit will attract a surcharge of 5 percent and 10 percent respectively,” the CBN said.
But under pressure conditions individuals and businesses can withdraw 11,277 and 10 million dollars ($22,553) respectively once a month, it added.
The central bank warned commercial lenders not to breach the new funding limit, which it said was in line with its policy of encouraging cash-strapped businesses.
The bank has expressed concerns in the past about counterfeit money, high unbanked funds and high ransom payments to thieves and robbers.
Last month, Nigeria introduced the newly minted currency, another move the central bank said would help curb inflation and spending.
More than 80 percent of the 3.2 trillion naira ($7.2bn) in circulation in Nigeria is outside commercial banks and in private hands, CBN Governor Godwin Emefiele said when he unveiled new documents.
“Money reform will also help in the fight against corruption because the project will also strengthen the high religion used in corruption and the movement of such money from banks can be easily tracked,” he said at the time.
The new notes – denominations of 200, 500 and 1,000 naira – will come into use on December 15, but Nigerians have until January 31 to write down the old notes when they will no longer be legal tender.